How to Run a Background Check on Your Stockbroker

The Financial Industry Regulatory Authority, a self-regulatory body commonly called Finra, requires brokers and the firms that employ them to report a wide range of issues, including bankruptcies and criminal charges brokers have faced. This is meant to enable investors to look up brokers on a Finra website called “BrokerCheck” and quickly find out their professional history.

Below, WSJ explains how to use BrokerCheck to find information on your stockbroker and the limitations of the service:

How can I run a background check on my stockbroker?
Investors can look up a broker’s record using BrokerCheck, a service offered by Finra on its website. This includes information on about 1.3 million current and former brokers, according to Finra.

Do I have to pay?
No. BrokerCheck is free – just put in the name of the broker or brokerage firm you want to check.

What red flags will this show?
The types of information shown include customer complaints, personal bankruptcies, unpaid tax liens and court judgments, felony and some other criminal charges and convictions, regulatory actions and employment terminations.

Will it include all the information in these areas?
No. Finra’s rules set limits on what has to be reported. The BrokerCheck information includes only bankruptcy petitions filed in the past 10 years, for example. Not all customer complaints have to be disclosed. Many types of criminal misdemeanor charges are also exempt from the reporting requirement.

Is there a risk that a broker could hide some information that should be reported?
Yes. The WSJ investigation, using a database on more than 500,000 stockbrokers, found more than 1,600 brokers with bankruptcy filings or criminal charges that should be reported on BrokerCheck under Finra rules but weren’t.

Is anything being done about this?
In response to The Journal’s findings, Finra said it is “deeply concerned” by the reporting failures. The regulator said it will focus now on ensuring the database is updated, as well as look closely at taking additional steps to address these reporting issues.